Wrap Text
Unaudited Interim Results for the half year ended 30 Nov 2012
Blue Label Telecoms Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/022679/06)
JSE Share code: BLU
ISIN: ZAE000109088
(Blue Label or BLT or the company or the group)
UNAUDITED RESULTS FOR THE HALF YEAR ENDED 30 NOVEMBER 2012
- Increase in headline earnings per share by 26% after excluding a once off income receipt in the comparative period*
- Decline in headline earnings per share by 5% after including the once off income receipt in the comparative period*
- Increase in revenue to R9,5 billion
- Increase in gross profit to R644 million
- Increase in gross profit margins by 0,42% to 6,80%
*Once off income receipt amounted to R79.4 million.
We continue to focus on diversifying our range of products and services and expanding our distribution footprint by
growing our business organically and through strategic acquisitions.
Summarised group statement of financial position
30 November 30 November 31 May
2012 2011 2012
Unaudited Unaudited Audited
As at R000 R000 R000
ASSETS
Non-current assets 1 060 927 998 127 993 076
Property, plant and equipment 99 094 130 741 112 188
Intangible assets and goodwill 483 604 528 074 505 698
Investment in associates and joint ventures 462 185 322 854 357 471
Loans receivable 1 119 - 1 435
Starter pack assets 3 107 9 715 4 501
Deferred taxation assets 11 818 6 743 11 783
Current assets 4 220 089 4 725 338 3 942 456
Financial assets at fair value through profit and loss - 10 -
Inventories 1 828 208 667 099 539 221
Loans receivable 53 506 31 607 30 049
Starter pack assets 2 194 8 286 3 191
Trade and other receivables 1 363 322 1 316 823 1 387 650
Prepayments - 391 402 -
Current tax assets 2 571 4 210 7 103
Cash and cash equivalents 970 288 2 305 901 1 975 242
Total assets 5 281 016 5 723 465 4 935 532
EQUITY AND LIABILITIES
Capital and reserves 3 004 144 3 119 701 2 914 386
Share capital, share premium and treasury shares 3 939 892 4 332 137 3 941 316
Restructuring reserve (1 843 912) (1 843 912) (1 843 912)
Non-distributable reserves 60 827 7 819 25 539
Share-based payment reserve 31 655 23 612 38 915
Transaction with non-controlling interests reserve (909 967) (909 572) (909 572)
Retained earnings 1 745 181 1 505 177 1 671 378
Non-controlling interests (19 532) 4 440 (9 278)
Non-current liabilities 20 084 109 048 50 624
Deferred taxation liabilities 20 084 25 977 21 598
Interest-bearing borrowings - 12 018 -
Trade and other payables - 71 053 29 026
Current liabilities 2 256 788 2 494 716 1 970 522
Trade and other payables 2 227 830 2 484 878 1 931 204
Provisions 9 758 4 012 6 260
Current tax liabilities 7 113 1 577 21 041
Current portion of interest-bearing borrowings - 4 249 -
Current portion of non-interest-bearing borrowings 12 087 - 12 017
Total equity and liabilities 5 281 016 5 723 465 4 935 532
Summarised group statement of comprehensive income
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2012 2011 2012
Unaudited Unaudited Audited
R000 R000 R000
Continuing operations
Revenue 9 466 174 9 249 177 18 715 390
Other income 4 498 89 787 97 412
Change in inventories of finished goods (8 822 436) (8 659 445) (17 507 468)
Employee compensation and benefit expense (149 083) (146 339) (327 830)
Depreciation, amortisation and impairment charges (33 557) (45 953) (91 557)
Other expenses (126 947) (94 910) (227 022)
Operating profit 338 649 392 317 658 925
Finance expense (91 373) (74 959) (181 081)
Finance income 91 062 85 611 170 995
Share of loss in associates and joint ventures (22 112) (11 308) (19 835)
Profit for the period before taxation 316 226 391 661 629 004
Taxation (98 664) (117 862) (194 075)
Net profit from continuing operations 217 562 273 799 434 929
Discontinued operation
Net loss for the period from discontinued operation - (12 064) (15 455)
Net profit for the period 217 562 261 735 419 474
Other comprehensive income:
Exchange profits on translation of equity loans - 9 038 5 395
Exchange profits on translation of foreign operations 35 331 14 588 36 058
Other comprehensive income for the period,
net of tax 35 331 23 626 41 453
Total comprehensive income for the period 252 893 285 361 460 927
Net profit for the period attributable to:
Equity holders of the parent 228 940 271 903 438 104
- From continuing operations 228 940 275 005 443 597
- From discontinued operation - (3 102) (5 493)
Non-controlling interests (11 378) (10 168) (18 630)
- From continuing operations (11 378) (1 206) (8 668)
- From discontinued operation - (8 962) (9 962)
Total comprehensive income for the period attributable to: 252 893 285 361 460 927
Equity holders of the parent 264 228 293 323 477 244
Non-controlling interests (11 335) (7 962) (16 317)
Earnings per share for profit attributable
to equity holders (cents)
Basic earnings per share 34,61 36,02 61,87
- From continuing operations 34,61 36,43 62,65
- From discontinued operation - (0,41) (0,78)
Diluted earnings per share** 34,05 35,58 60,97
- From continuing operations 34,05 35,99 61,75
- From discontinued operation - (0,41) (0,78)
Headline earnings per share 34,78 36,74 64,65
- From continuing operations 34,78 37,15 65,43
- From discontinued operation - (0,41) (0,78)
Diluted headline earnings per share** 34,22 36,29 63,70
Dividend per share 23,00 14,00 14,00
Weighted average number of shares 661 520 749 754 875 983 708 059 527
Diluted weighted average number of shares 672 430 432 764 256 072 718 577 060
Number of shares in issue 674 509 042 766 360 894 674 509 042
Reconciliation between net profit and core net profit for the period:
Net profit for the period attributable to equity holders of the parent 228 940 271 903 438 104
Amortisation on intangible assets raised through business combinations
net of tax and net of non-controlling interest 6 913 10 237 17 693
Core net profit for the period 235 853 282 140 455 797
Core net profit attributable to: 224 602 271 846 437 420
Equity holders of the parent 235 853 282 140 455 797
Non-controlling interests (11 251) (10 294) (18 377)
- Core earnings per share (cents)* 35,65 37,38 64,37
* Core earnings per share is calculated after adding back the amortisation of intangible assets as a consequence of the purchase
price allocations completed in terms of IFRS 3(R): Business Combinations.
** Diluted earnings per share and diluted headline earnings per share are calculated by adjusting the weighted average number of
ordinary shares outstanding for the number of shares that would be issued on vesting under the employee forfeitable share plan.
Summarised group statement of cash flows
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2012 2011 2012
Unaudited Unaudited Audited
R000 R000 R000
Cash flows from operating activities (723 118) 794 644 528 109
Cash flows from investing activities (107 418) (204 684) (276 991)
Cash flows from financing activities (174 304) (517 629) (519 984)
(Decrease)/increase in cash and cash equivalents (1 004 840) 72 331 (268 866)
Cash and cash equivalents at the beginning of the period 1 975 242 2 226 170 2 226 170
Translation difference (114) 7 400 17 938
Cash and cash equivalents at the end of the period 970 288 2 305 901 1 975 242
Summarised group statement of changes in equity
Share capital, Transaction with
share premium Non- non-controlling Share-based
and treasury Retained Restructuring distributable interests payment Non-controlling
shares earnings reserve reserve reserve reserve interests Total equity
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Six months ended R000 R000 R000 R000 R000 R000 R000 R000
Balance as at 1 June 2011 4 348 231 1 340 318 (1 843 912) (13 601) (909 006) 19 099 14 234 2 955 363
Net profit for the period - 271 903 - - - - (10 168) 261 735
Other comprehensive income - - - 21 420 - - 2 206 23 626
Total comprehensive income/(loss) - 271 903 - 21 420 - - (7 962) 285 361
Dividends paid - (107 044) - - - - (1 900) (108 944)
Treasury shares purchased (16 094) - - - - - - (16 094)
Equity-based compensation movements - - - - - 4 513 68 4 581
Transaction with non-controlling
interest movements - - - - (566) - - (566)
Balance as at 30 November 2011 4 332 137 1 505 177 (1 843 912) 7 819 (909 572) 23 612 4 440 3 119 701
Balance as at 1 June 2012 3 941 316 1 671 378 (1 843 912) 25 539 (909 572) 38 915 (9 278) 2 914 386
Net profit for the period - 228 940 - - - - (11 378) 217 562
Other comprehensive income - - - 35 288 - - 43 35 331
Total comprehensive income/(loss) - 228 940 - 35 288 - - (11 335) 252 893
Dividends paid - (155 137) - - - - (1 900) (157 037)
Treasury shares purchased (17 223) - - - - - - (17 223)
Non-controlling interests acquired
during the period - - - - - - 2 829 2 829
Transaction with non-controlling
interest reserve movement - - - - (395) - 395 -
Equity compensation benefit scheme
shares vested 15 799 - - - - (15 559) (240) -
Equity-based compensation movements - - - - - 8 299 (3) 8 296
Balance as at 30 November 2012 3 939 892 1 745 181 (1 843 912) 60 827 (909 967) 31 655 (19 532) 3 004 144
Audited Audited Audited Audited Audited Audited Audited Audited
Year ended R000 R000 R000 R000 R000 R000 R000 R000
Balance as at 1 June 2011 4 348 231 1 340 318 (1 843 912) (13 601) (909 006) 19 099 14 234 2 955 363
Net profit for the year - 438 104 - - - - (18 630) 419 474
Other comprehensive income - - - 39 140 - - 2 313 41 453
Total comprehensive income/(loss) - 438 104 - 39 140 - - (16 317) 460 927
Dividends paid - (107 044) - - - - (2 945) (109 989)
Treasury shares purchased (16 095) - - - - - - (16 095)
Shares acquired (392 378) - - - - - - (392 378)
Equity compensation benefit scheme
shares vested 1 558 (1 517) (41) -
Equity-based compensation movements - - - - - 21 929 197 22 126
Share of equity movement in associates - - - - - (596) - (596)
Transaction with non-controlling
interest reserve movement - - - - (566) - - (566)
Non-controlling interests disposed of
during the year - - - - - - (4 406) (4 406)
Balance as at 31 May 2012 3 941 316 1 671 378 (1 843 912) 25 539 (909 572) 38 915 (9 278) 2 914 386
Segmental summary
South African International
Total distribution distribution Technology Mobile Solutions Corporate
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Six months ended 30 November 2012 R000 R000 R000 R000 R000 R000 R000
Total segment revenue 12 247 416 12 060 918 - 16 467 94 472 75 559 -
Inter-segment revenue (2 781 242) (2 747 014) - (8 904) (17 884) (7 440) -
External revenue 9 466 174 9 313 904 - 7 563 76 588 68 119 -
EBITDA 372 206 436 248 (19 727) (37 050) 21 075 14 391 (42 731)
Net profit/(loss) for the period net of
non-controlling interests 228 940 329 960 (24 926) (48 980) 14 295 8 019 (49 428)
Amortisation on intangibles raised through
business combinations net of tax and
non-controlling interests 6 913 4 546 2 030 190 115 32 -
Core net profit/(loss) for the period 235 853 334 506 (22 896) (48 790) 14 410 8 051 (49 428)
At 30 November 2012
Total assets 5 281 016 4 470 514 438 021 83 220 95 120 153 563 40 578
Net operating assets/(liabilities) 1 963 301 1 966 974 (10 598) 1 666 11 899 31 244 (37 884)
Six months ended 30 November 2011
Total segment revenue 14 703 706 14 533 390 14 331 13 292 46 978 95 715 -
Inter-segment revenue (5 454 529) (5 444 571) - (5 037) (2 253) (2 668) -
External revenue 9 249 177 9 088 819 14 331 8 255 44 725 93 047 -
EBITDA 438 270 394 357 2 918 (34 564) 89 946 24 186 (38 573)
Net profit/(loss) for the period net of
non-controlling interests 275 005 300 141 (7 727) (44 835) 70 204 13 664 (56 442)
Amortisation on intangibles raised through
business combinations net of tax and
non-controlling interests 10 237 4 223 1 215 190 4 577 32 -
Core net profit/(loss) for the period 285 242 304 364 (6 512) (44 645) 74 781 13 696 (56 442)
At 30 November 2011
Total assets 5 723 465 4 618 252 329 763 87 478 67 901 181 928 438 143
Net operating assets 2 230 622 1 771 651 27 939 2 733 15 951 52 258 360 090
Audited Audited Audited Audited Audited Audited Audited
Year ended 31 May 2012 R000 R000 R000 R000 R000 R000 R000
Total segment revenue 30 173 943 29 855 365 17 429 28 405 96 084 176 660 -
Inter-segment revenue (11 458 553) (11 432 351) (11 731) (8 840) (5 631) -
External revenue 18 715 390 18 423 014 17 429 16 674 87 244 171 029 -
EBITDA 750 482 801 746 (15 901) (64 258) 97 359 38 927 (107 391)
Net profit/(loss) for the year net of
non-controlling interests 443 597 587 179 (24 784) (83 144) 69 270 21 259 (126 183)
Amortisation on intangibles raised through
business combinations net of tax and
non-controlling interests 17 693 8 716 3 841 379 4 692 65 -
Core net profit/(loss) for the year 461 290 595 895 (20 943) (82 765) 73 962 21 324 (126 183)
At 31 May 2012
Total assets 4 935 532 4 279 757 337 494 84 304 62 278 137 997 33 702
Net operating assets/(liabilities) 1 971 934 2 032 935 (10 126) (3 703) 5 247 7 385 (59 804)
Disposal of subsidiary
Shares in the following subsidiary were disposed of during the period:
Effective date
of disposal % disposed
Subsidiary
Content Connect Africa Proprietary Limited 1 September 2012 100
Details of the total net assets disposed of and the resulting loss on disposal are as follows:
Total
R000
Total proceeds 2 000
Fair value of net assets disposed of 4 027
Loss on disposal (2 027)
The assets and liabilities disposed of are as follows:
Fair value at
disposal date
R000
Cash and cash equivalents 486
Property, plant and equipment 117
Intangible assets 2 970
Trade and other receivables 6 503
Borrowings (3 130)
Current tax liabilities (45)
Trade and other payables (7 620)
Fair value of subsidiary disposed of (719)
Goodwill 4 746
Fair value of net assets disposed of 4 027
Proceeds on disposal of subsidiary 2 000
Cash and cash equivalents of subsidiary disposed of (486)
Cash inflow on disposal 1 514
Acquisitions of subsidiaries
Shares in the following subsidiaries were acquired during the period:
Effective date
of acquisition % acquired
Subsidiaries
Blue Label Engage Proprietary Limited 1 September 2012 50,1
Panacea Mobile Proprietary Limited 1 September 2012 51
Details of the total net assets acquired and the resulting goodwill as at acquisition are
as follows:
Total
R000
Total purchase consideration 12 569
Fair value of net assets acquired 2 944
Goodwill 9 625
The assets and liabilities acquired through the acquisitions are as follows:
Acquirers carrying
Fair value at amount on
acquisition date acquisition date
R000 R000
Cash and cash equivalents 2 977 2 977
Property, plant and equipment 126 126
Intangible assets 5 263 -
Trade and other receivables 2 255 2 255
Deferred taxation liabilities (1 474) (1 474)
Current tax liability (1 015) (1 015)
Borrowings (114) (114)
Trade and other payables (2 245) (2 245)
Fair value of subsidiaries acquired 5 773 510
Minority interests (2 829)
Fair value of net assets acquired 2 944
Total purchase consideration 12 569
Deferred purchase consideration (2 669)
Cash and cash equivalents in subsidiaries acquired (2 977)
Cash outflow on acquisition 6 923
Headline earnings
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2012 2011 2012
Unaudited Unaudited Audited
R000 R000 R000
Profit attributable to equity holders of the parent 228 940 271 903 438 104
Net loss/(profit) on disposal of property, plant and equipment - 41 (65)
Loss on disposal of subsidiary 2 027 - 3 014
(Profit)/loss on disposal of associates and joint ventures (873) - 3 025
Impairment of intangible assets and property, plant and equipment - 5 431 9 354
Impairment of goodwill - - 4 684
Profit on disposal of investment - - (361)
Headline earnings 230 094 277 375 457 755
Headline earnings per share (cents) 34,78 36,74 64,65
- From continuing operations 34,78 37,15 65,43
- From discontinued operation - (0,41) (0,78)
Commentary
Financial review
The financial results for the period ended 30 November 2011, reflected a once off income receipt of R79,4 million that
was received in October 2011.
The once off income receipt is excluded for the purposes of representing the performance of the group during the
period under review; headline earnings per share of 34,78 cents equated to a growth of 26%. These results were achieved
through a growth in revenue to R9,5 billion, an increase in gross profit by 9% to R644 million, supported by gross profit
margin increases from 6,38% to 6,80% as well as the reduction in issued shares as a result of the purchase of Microsofts
12% shareholding in the group in December 2011.
The vending of pinless top ups was introduced as an additional mechanism for the distribution of prepaid airtime
during the comparative period. Only the gross profit earned thereon is included in group revenue as opposed to the gross
revenue generated from transactions of this nature. These sales increased from R7 million to R411 million. The inclusion
of this revenue in group revenue would effectively result in a growth in total group revenue of 7%.
The increase in gross profit included the exponential growth in commissions earned on the distribution of prepaid
electricity as well as compounding annuity revenue earned from starter packs. Furthermore, the healthy cash resources
enabled the group to enter into bulk inventory purchase transactions totalling R1,5 billion, at favourable discount rates.
The South African distribution segment remains the predominant contributor to group earnings. On the international
front, Ukash continued to increase profitability whilst Oxigen Services India (OSI) and Blue Label Mexico (BLM)
incurred losses.
Cash flows generated from operating activities, before the bulk inventory purchase transactions of R1,5 billion,
amounted to R566 million. Post these transactions, the net movement in inventory by R1,3 billion, resulted in a negative cash
flow from operating activities of R723 million.
The statement of financial position, reflecting capital and reserves of R3 billion, remains robust and liquid.
Financial overview
- Revenues increased to R9,5 billion.
- Gross profit increased by R54 million to R644 million supported by margin increases from 6,38% to 6,80%.
- Overheads increased by 14%.
- EBITDA increased to R372 million equating to a growth of 4%.*
- Headline earnings increased by 10% to R230 million.*
- Headline earnings per share increased by 26% from 27,70 cents* to 34,78 cents per share.
- On inclusion of the once off comparative receipt, headline earnings per share declined by 5% from 36,74 cents to 34,78 cents.
*On exclusion of the once off income receipt of R79,4 million in the comparative period.
Basis of preparation
The condensed consolidated interim financial information has been prepared in accordance with the requirements of
Section 8.57 of the JSE Limited Listings Requirements and the presentation and disclosure requirements of IAS 34 Interim
Financial Reporting and the AC500 standards as issued by the Accounting Practices Board. The condensed consolidated interim
financial information has been prepared in accordance with International Financial Reporting Standards (IFRS) and the
requirements of the Companies Act of South Africa.
This interim financial information has been prepared in accordance with the going concern principle, under the
historical cost convention, except for certain financial and equity investments which have been measured at fair value. The
accounting policies and methods of computation are consistent with those applied in the annual financial statements for the
year ended 31 May 2012, with the exception of the standards that are effective for the first time in the current
period. These have been disclosed in note 1 to the annual financial statements. These standards have not had a significant
impact on the interim financial information.
In addition, the group uses core net profit as a non-IFRS measure in evaluating the groups performance. This
supplements the IFRS measures. Core net profit is calculated by adjusting net profit for the year with the amortisation of
intangible assets that arise as a consequence of the purchase price allocations completed in terms of IFRS 3(R): Business
Combinations.
The results have not been reviewed or audited for the period ended 30 November 2012.
Segmental report
South African distribution
Unaudited Unaudited
2012 2011 Growth
R000 R000 R000 Growth
Revenue 9 313 904 9 088 819 225 085 2%
Gross profit 558 344 503 402 54 942 11%
EBITDA 436 248 394 356 41 892 11%
Core net profit 334 506 304 362 30 144 10%
Gross profit margin 5,99% 5,54%
EBITDA margin 4,68% 4,34%
Prepaid airtime, annuity revenue generated from starter packs and commissions earned on the distribution of prepaid
electricity, accounted for a 2% increase in revenue. This excluded growth of R404 million in sales of pinless top ups, the
gross profit thereon only being accounted for as revenue. The effective growth in revenue therefore equated to 7%.
Commissions earned on the distribution of prepaid electricity amounted to R53 million (2011: R41 million), equating to
revenue generated on behalf of utilities of R3,5 billion (2011: R2,7 billion). Gross profit increased by R55 million
(11%), supported by margin increases from 5,54% to 5,99%. Commissions on prepaid electricity accounted for 0,11% of this
margin increase. On exclusion of IFRS adjustments, margins increased from 5,24% to 5,75%.
The growth in EBITDA of 11% was inclusive of the effects of IFRS adjustments. On exclusion of these adjustments in
both the comparative and current period, a more representative growth of R47 million was achieved, equating to a 13%
increase.
International distribution
Unaudited Unaudited
2012 2011 Growth
R000 R000 R000 Growth
Revenue - 14 331 (14 331) (100%)
Gross profit - 3 488 (3 488) (100%)
EBITDA (19 727) 2 918 (22 645) (776%)
Discontinued operation* - (3 102) 3 102 (100%)
Share of losses from associates and joint ventures (23 122) (11 008) (12 114) (110%)
Ukash 4 362 2 274 2 088 92%
Oxigen Services India (2 455) (4 399) 1 944 44%
Blue Label Mexico (22 894) (8 464) (14 430) (170%)
Other (2 135) (419) (1 716) (410%)
Core net loss from continuing operations (36 730) (11 296) (25 434) (225%)
- Equity holders of the parent (22 896) (6 510) (16 386) (252%)
- Non-controlling interests (13 834) (4 786) (9 048) (189%)
Core net loss from discontinued operation - (12 064) 12 064
- Equity holders of the parent - (3 102) 3 102
- Non-controlling interests - (8 962) 8 962
*Represents loss after taxation and non-controlling interests in Africa Prepaid Services Nigeria.
Historical revenue and gross profit were generated by SharedPhone International, which was disposed of in January
2012.
The decline in EBITDA of R23 million was predominantly representative of costs incurred on the ongoing litigation
pertaining to Africa Prepaid Services Nigeria (APSN) and a decline in foreign exchange gains relating to loans to OSI.
The comparative losses from discontinued operations pertained to the winding down of APSN.
The groups objective in the international segment is to partner with local management in the countries in which it
operates. These partnerships result in its international operations being equity accounted for. The groups current active
international operations, namely, Ukash, Oxigen Services India and Blue Label Mexico are disclosed accordingly under
share of losses from associates and joint ventures.
The share of these net losses comprised the following:
Ukash
The groups share of profits in Ukash, after the amortisation of intangible assets, increased by 92% to R4,4 million.
These results were achieved on organic growth in revenue by 28%, an increase in gross profit by 35% and EBITDA growth of
33%, all reported in their local currency.
Oxigen Services India
Blue Labels share of losses declined to R2,5 million against losses of R4,4 million in the comparative period.
Revenue increased by 16% resulting in a positive EBITDA, all reported in their local currency.
When comparing the performance of OSI to the six months ended 31 May 2012, revenue declined by a melded 2%. This was
due to the necessity to upgrade its information technology systems to a more robust and scalable platform. In addition
10 500 terminals were replaced on a piecemeal basis with more advanced equipment. This process resulted in a temporary
decline in retail sales. Costs incurred in this transition process resulted in a decline in EBITDA over this period.
The focus on the above, compounded by the necessity to employ and train 200 field sales executives to cover the
expansive urban and rural India, impacted negatively on its operating profits.
Blue Label Mexico
In the comparative period BLM incurred losses of R20 million of which the groups share of 40% equated to R8,5 million
after the amortisation of intangible assets. In the current period BLMs losses increased to R52 million. In October
2012, BLT increased its shareholding from 40% to 45%. The groups melded share of losses for the period equated to
R23 million.
The losses in Mexico were primarily attributable to an increase in overhead costs, necessitated by its aggressive roll
out of point of sale devices and ancillary support required thereon. At the end of the reporting period the number of
point of sale devices increased to 42 000 net of churn.
Mobile
Unaudited Unaudited
2012 2011 Growth
R000 R000 R000 Growth
Revenue 76 588 44 725 31 863 71%
Gross profit 49 157 33 345 15 812 47%
EBITDA 21 075 89 946 (68 871) (77%)
Core net profit 14 410 74 781 (60 371) (81%)
This segment comprises Cellfind, Blue Label One and Content Connect Africa. The comparative EBITDA includes the once
off income receipt of R79,4 million. On elimination of this comparative receipt, the effective growth in both EBITDA and
core net profit equated R10 million and R8 million respectively. This was achieved through an increase in revenue by 71%
and an increase in gross profit by 47%. Content Connect Africa was disposed of in September 2012.
Solutions
Unaudited Unaudited
2012 2011 Growth
R000 R000 R000 Growth
Revenue 68 119 93 047 (24 928) (27%)
Gross profit 31 540 44 503 (12 963) (29%)
EBITDA 14 391 24 186 (9 795) (40%)
Core net profit 8 051 13 696 (5 645) (41%)
The Solutions segment houses Blue Label Data Solutions (BLDS), Velociti and CNS Call Centres. BLDS contributed R15
million to EBITDA, equating to a growth of 34% on the prior period. This growth was negated by a negative EBITDA
contribution by Velociti due to a substantial decline in outbound call centre campaigns. It is the intention to increase the
volume of inbound activity in order to compensate for the outbound decline.
Technology
Unaudited Unaudited
2012 2011 Growth
R000 R000 R000 Growth
Revenue 7 563 8 255 (692) (8%)
Gross profit 4 697 4 994 (297) (6%)
EBITDA (37 050) (34 564) (2 486) (7%)
Core net loss (48 790) (44 645) (4 145) (9%)
Technology losses are representative of the costs of development and support to the groups Information Technology
infrastructure. Income generation was limited to services to third parties.
Corporate
Unaudited Unaudited
2012 2011 Growth
R000 R000 R000 Growth
EBITDA (42 731) (38 573) (4 158) (11%)
Core net loss (49 428) (56 442) 7 014 12%
In spite of an increase in negative EBITDA by 11%, core net loss declined by 12%. This decline was mainly due to the
change in legislation applicable to Secondary Tax on Companies (STC). No STC was payable on the dividends declared in
the current period, whereas STC on dividends declared in the comparative period amounted to R11 million.
Depreciation, amortisation and impairment charges
Depreciation and amortisation of intangible assets declined by R6 million due to impairments of assets in the prior
period. Amortisation of intangible assets in terms of purchase price allocations declined by R6 million in line with the
expiration of useful tenure.
Net finance income
Finance costs
Finance costs totalled R91 million, of which R8 million related to interest paid on borrowed funds and R83 million to
imputed IFRS interest adjustments on credit received from suppliers. On a comparative basis, interest paid on borrowed
funds was R3 million and the imputed IFRS interest adjustment was R72 million. The increase in interest paid on borrowed
funds was attributable to the bulk inventory purchase transactions of which facilities were utilised and repaid during
the current period.
Finance income
Finance income totalled R91 million, of which R26 million was interest received on cash resources and R65 million
pertained to IFRS adjustments. On a comparative basis interest received on cash resources amounted to R32 million and the
imputed IFRS interest adjustment R54 million. The decline in interest received on cash resources was caused by the
utilisation of funds on hand for the bulk inventory purchase transactions as well as by a reduction in interest rates by 0,5%.
Statement of financial position
Total assets increased by R345 million, of which R68 million was attributable to growth in non-current assets and R277
million in current assets.
The movement in non-current assets by R68 million was mainly attributable to investment in associates and joint
ventures, of which R86 million related to an additional investment in BLM, set off by net losses of
R22 million in associates and joint ventures.
The increase in current assets was primarily due to an additional inventory holding congruent with the bulk inventory
purchases. These transactions were also the primary cause for the decline in cash resources. Although the stock turn
consequently increased from an historical average of 11 days to 38 days in the short term, the discount afforded thereon
justified this temporary excess in inventory holding.
Debtors collection period remained consistent at 26 days.
The net profit of R229 million less a dividend of R155 million as well as the movement of R35 million in foreign
exchange translation reserves were the main contributors to the growth in capital and reserves.
Current liabilities increased by R286 million in line with the utilisation of extended credit available. Accordingly,
the payment period to creditors increased from 37 days to 46 days.
Statement of cash flows
Cash flows of R566 million were generated from trading operations, of which R1,3 billion was applied to an increase in
inventory, resulting in negative cash flows from operating activities of R723 million.
A further R107 million was applied to investing activities of which R86 million related to the additional investment
in BLM, R12 million to capital expenditure and R7 million to acquisitions.
After the payment of dividends of R157 million to shareholders and minorities and the acquisition of treasury shares
for R17 million, the cash on hand amounted to R970 million.
Forfeitable share scheme
Forfeitable shares totalling 3 881 276 (2011: 4 836 611) were issued to qualifying employees. During the period
434 061 (2011: 910 093) shares were forfeited and 2 700 512 (2011: nil) shares vested.
Prospects
A number of innovative financial services products, aimed at bringing financial inclusion and transactional value to
customers, will be launched. These initiatives will benefit through the utilisation of BLTs mobile systems and the
leveraging of the groups extensive distribution network. These additional financial services products complement the groups
existing prepaid products and enhance the value-proposition to the merchants and their customers.
Recently launched loyalty initiatives are expected to generate revenue through supporter engagement programmes,
including communications, events, access-control and concessionary services that enhance service value to supporters. These
programmes benefit from the latest Near Field Communication and mobile technologies to collect and process data beneficial
to the customer experience.
SMS aggregation is expected to gain further momentum following the successful development of technology pertaining to
this service and a strategic acquisition in this segment of the market.
Consumer awareness of the benefits of prepaid electricity is expected to continue and in turn impact favourably on
commissions earned on the distribution of this product.
Oxigen Services India continues its drive into banking services initiatives in partnership with leading banks and
financial institutions.
The groups statement of financial position remains robust and liquid, which augurs well for future growth,
acquisitions and distributions to shareholders.
Subsequent events
Airtime bases were acquired from Vo-Call Cellular Proprietary Limited and DNI 4PL Contracts Proprietary Limited for
R108 million and R40 million respectively.
The above transactions were both concluded in January 2013.
Appreciation
The board of Blue Label Telecoms would once again like to express its appreciation to its suppliers, customers,
business partners and staff for their ongoing support and loyalty.
For and on behalf of the board
LM Nestadt BM Levy and MS Levy DB Rivkind*
Chairman Joint Chief Executive Officers Financial Director
19 February 2013
*Supervised the preparation and review of the groups interim results.
Directors: LM Nestadt (Chairman)*, BM Levy, MS Levy, K Ellerine*, GD Harlow*, NN Lazarus SC*, JS Mthimunye*,
MV Pamensky, DB Rivkind, J Vilakazi*
(*Non-executive)
Company Secretary: E Viljoen
Sponsor: Investec Bank Limited
Auditors: PricewaterhouseCoopers Inc.
www.bluelabeltelecoms.co.za
Date: 20/02/2013 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
